The last time I wrote about Vinco Ventures (NASDAQ:BBIG) stock, it had just announced a $108 million cash-and-stock acquisition of AdRizer LLC.
Despite the big news, I wasn’t having any of it. For me, BBIG stock was an easy sell recommendation.
“As I said in August, I have serious reservations about Vinco Ventures. Unfortunately, the acquisition of AdRizer does little to remedy my concerns,” I wrote on Oct. 12.
“Good luck if you own this stock. You’re going to need it.”
Since my article, it’s lost 64% of its value. Now trading around $2.30, it’s only a matter of time before it drops below $2.
The company’s lack of focus says it all.
BBIG Stock Becomes ZASH
The company announced on Oct. 20 that it was changing its name from Vinco Ventures to ZASH.
“It really is amazing looking back over the last several months at how fast and quick we have grown ZASH into one of the most respected and disruptive media and entertainment companies in the world,” said ZASH Chairman and Co-Founder Ted Farnsworth.
As stated in its press release announcing the name change, the company noted that its Lomotif subsidiary is one of the top 10 competitors to TikTok. With that and AdRizer, Farnsworth believes “the sky is the limit.”
Maybe. But until I get some financial details about each business’s revenues and profits/losses, I’m at a loss why anyone would buy this stock.
I got my answer on Nov. 1.
Vinco Gets Into Hawking Bitcoin Miners
Vinco or ZASH, or whatever you want to call it, announced that its Cryptyde subsidiary had entered into a joint venture with Wattum Management.
The joint venture is to be called CW Machines LLC. It has placed an initial order for 2,000 Bitmain Antminer S19s.
At first glance, the press release reads like it’s going into Bitcoin mining. However, Cryptyde CEO Brian McFadden’s quote at the end of the press release says otherwise.
“We are living through a fundamental evolution in the financial sector. With the advancement of crypto markets into mainstream America, the average consumer is only entering ‘after the fact’ or after the coin exists,” McFadden stated.
“Our goal with CW Machines is to allow that average consumer the opportunity to be involved in the creation process of that asset through affordable access to crypto mining equipment.”
InvestorPlace’s Louis Navellier thinks this move into Bitcoin mining makes BBIG worth owning. I guess it means Vinco has gotten into selling Bitcoin miners.
Looking at Wattum’s website, it also could mean that Vinco is providing capital to its CW Machines joint venture that will be used for customer financing for the “average consumer” buying some of its 2,000 Bitmain Antminer S19s.
There’s nothing wrong with hawking Bitcoin miners. But don’t make the joint venture out to be some grandiose plan to control the blockchain when it’s nowhere near that.
The Bottom Line
On Nov. 10, the company issued a press release providing additional information about the spin-off of Crytyde into its own publicly-traded company.
The spin-off is expected to be a tax-free distribution with Vinco shareholders getting one share of Cryptyde (symbol TYDE on NASDAQ) for every 10 shares held in the parent.
At the end of September, Vinco had 137.1 million shares outstanding.
I expect with the AdRizer deal that some of the shares issued by ZASH to pay for the acquisition will be converted into BBIG stock, so the ultimate number of shares issued to shareholders for Cryptyde could be much higher than 13.7 million [10% of 137.1 million].
Based on a current $2.33 share price and a market cap of $319 million, Cryptyde, if it were trading, would have a current market cap of $32 million. That seems way out of line for a business that doesn’t seem to have any revenue yet.
Most holding companies have some vision for the type of businesses it wants to own. But, unfortunately, Vinco seems to be throwing stuff against the wall to see what sticks.
The lack of focus and a relatable story will ultimately kill BBIG stock if it hasn’t already. It’s cheap for a reason.
I would not touch this falling knife. It’s not a business. It’s an exercise in paper shuffling.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.